Cost of living pushes over 1 million parents back to work

The choice of caring for your own children is rapidly turning into a luxury available only to those who can afford it. A new study by uSwitch.com reveals that more than 1 in 3 (38%) new parents (those with children under 2 years old) are forced to return to work to make ends meet . In fact, the number of stay at home parents has hit its lowest level in 15 years with just 7% of all parents now staying at home to look after their children. With household bills rising £148 a month since 2007, the real rate of inflation for families hitting 9%, and the UK seeing disposable income at its lowest level in a decade, the rising cost of living is taking its toll on young families.

Losing the choice

Parents seem to be losing the choice over whether to stay at home or continue to work. A quarter (26%) of new parents have been able to choose not to work, but many have not had this option. Tellingly, in working parent households, 7 out of 10 (71%) would have stayed at home with their children if money was no object. In reality however, just over 1 in 10 (14%) new parents that have returned to work after having a child actually chose to do so.

Things are not much better for those who want to return to work - almost a fifth (18%) of new parents say they have had to stay at home because they can't afford childcare. The cost of childcare for the under-2s has risen by 33% in the last six years alone from an average of £6,240 per year in 2002 to £8,268 in 2008. It is set to rise by a further 10% by 2010.

Balancing home and work life

As parents increasingly head back to work after having a baby, they are having less quality time to spend with their children. The uSwitch.com report found that 38% of working parents spend less than 4 waking hours together with their children a day. Worryingly, 3.4 million working parents (32%) believe their children would have a better quality of life if they stayed at home with them.

The period of time taken off after having a child has also reduced. Parents with children under the age of 16 took an average of three years off work when their baby was born, compared to the average of almost 5 years taken by parents of children aged over 16.

As the balance of parents staying at home to raise their children has shifted over recent decades, so too has the traditional balance of mothers staying home and fathers heading out to work. Over the last 15 years, the number of women in the UK has increased by 7%, but the number staying at home to care for their families has decreased by 24%, and is set to decrease by a further 2% by 2010. The number of women in the workplace has increased by 18% since 1993, and the average age of a first time mother has increased from 28 to 30 over the same time period.

The number of mothers staying at home may have fallen, but the number of stay-at-home fathers has increased by 58% from 1993 to 2008 - albeit there is still only one dad for every 10 mums staying at home today.

Cost of living

The cost of living seems to be an overwhelming factor in stripping away parents' choices. Families would need an average annual household income of £31,731 for one parent to stay at home. However, the average annual income for a male is £28,464 (10% lower) and £18,047 (43% lower) for a female, so for many this is a distant dream.

Hikes in taxes, utility bills and social contributions over the last decade have pushed disposable income in the UK to its lowest level since 1997. Essential bills have risen by 9% with families paying out an average of £148 a month more on household bills than this time last year. The highest price rises have been in petrol (up 18%), energy (up 13%), and mortgages (up 9%). With average salaries increasing by just 3.4%, families are struggling to keep up. On top of these price rises, the cost of raising a child is now estimated at £8,859 a year and is predicted to rise to over £12,500 a year by 2012.

In a pledge to encourage more parents back into the workplace, initiatives announced by the Government in the recent Budget include raising the child benefit for a family's first child to £20 a week from 2009, a year earlier than planned, while child tax credit will be increased by £50 a year. According to the Chancellor these initiatives will take 250,000 out of poverty. As part of its welfare reform programme, the Government will also try to get 300,000 lone parents back into employment.

But the uSwitch survey adds fuel to the debate on whether enough is being done. Independent bodies such as the Policy Exchange think-tank are calling on the Government to scrap the current system of tax credits altogether in favour of a universal child care allowance - worth £60 per young child per week - that families could spend on a care provider or use to support one of the parents staying at home to care for their family.

Ann Robinson, Director of Consumer Policy at uSwitch.c om, comments: "Economic factors are taking away the choice for many young families today. People who want to stay at home can't afford to due to rising household bills, and even people who want to return to work can't afford to either, due to the high cost of childcare. As a result, both parents and children are losing out.

"Any initiatives introduced by the Government that support parents wishing to return to work when they have children should be commended - but we also need to recognise that some parents would prefer to stay at home to look after their children, even if only during the early years. This is all about parents having a say in how they raise their families. There is still a lot of work to be done to ease the strain on family finances, but in the meantime, families can help themselves by taking a long hard look at their household budgets to see where they can cut costs."

Benefits and help for parents going back to work:

Early years education - all three and four year olds are entitled to twelve-and-a-half hours of free early years education a week, for 38 weeks a year.

Child Tax Credit - is a means-tested allowance for parents and carers of children or young people who are still in full-time education. Nine out of ten families with children qualify.

Working Tax Credit - for families working more than 16 hours a week on a low income. Includes a specific element to support the cost of childcare for working parents.

Time off (‘parental leave') - working parents can take up to 13 weeks parental leave for each child until their fifth birthday (employers don't have to pay parents for this but it could be included within the employment package).

Flexible working - allows parents to ask their employer for a new working pattern to help care for a child.

Job Grant - tax free lump sum parents may get when they start full-time work (subject to conditions).

Child Maintenance Bonus and Child Maintenance Premium - anyone receiving Income Support (IS) or income-based Jobseeker's Allowance (JSA(IB)), who is getting maintenance for a child or children, may be eligible.

Getting help from your employer - many employers now offer their employees help to pay for childcare.